Two companies, Google and Facebook, are dominating the digital side of the marketing business. Six out of every ten dollars spent on digital ads is spent with one of them, and that’s accelerating: the pair claim nine out of every ten new digital ad dollars. I wonder how many first-time home buyers visit one or both during the day? Probably 100%. According to Freddie Mac, first-time buyers, whose median age is 32, accounted for 46% of all purchase mortgages in Q1. This is the largest share since 2012, and likely reflects a softening credit environment and a strong job market. Moreover, millennials with the wherewithal are apparently entering the housing market in substantial numbers, fearing that rising interest rates and appreciating property values will eventually shut them out.

Fannie and Freddie Changes

The Mortgage Bankers Association wants the Federal Housing Finance Agency (overseer of F&F into the foreseeable future) to require public disclosure on “any notice” of new business activities being planned by Fannie Mae and Freddie Mac, even if “such activity is not deemed to be a new product and receives a non-objection from FHFA.” Both Freddie and Fannie are earning some decent coin, but there are whispers that the two might be overstepping their boundaries/charter in mortgage insurance products and the financing of rental homes.

Fannie Mae issued a new fraud alert identifying 34 apparently fictitious employers being used on loan applications in Southern California. View the fraud alert and other resources on its Mortgage Fraud Prevention page.

Freddie Mac and Fannie Mae have launched an initiative to update the Uniform Appraisal Dataset (UAD) and uniform appraisal reporting forms. The UAD and Forms Redesign initiative will leverage extensive stakeholder input to update the appraisal dataset, align it with the industry-standard MISMO® Reference Model Version 3.X, and overhaul the uniform appraisal forms to establish a more flexible, dynamic structure for appraisal reporting. This work is designed to provide greater clarity to lenders, borrowers, and investors; simplify appraisal reporting and reviewing; and build a foundation for appraisal modernization. The GSEs are working together, at the direction of the Federal Housing Finance Agency to assess and, as appropriate, begin implementation of strategies to redesign the UAD.

The Fannie Mae Servicer's Reconciliation Facility™ (SURF™) will be upgraded this summer to enhance the software and the appearance of the application. In addition, users will no longer be required to configure browser settings to Internet Explorer 8 to receive the exception messages. More information coming soon. Additional Fannie Mae technology requirements can be found here.

Fannie Mae announced an update regarding the high loan-to-value (LTV) refinance option, which will be available for refinance applications received on or after Nov. 1. As a reminder, this option is for Fannie Mae borrowers who are making their mortgage payments on time, but whose LTV ratios exceed our maximum allowed for standard limited cash-out refinance transactions. This update provides loan-level price adjustment information and changes the minimum LTV ratio to 97.01% for a one-unit, principal residence. For more information, including details about pricing and delivery requirements, read Lender Letter LL-2018-02.

Fannie Mae announced, updated HomeReady® income limits will be implemented in Desktop Underwriter® (DU®) and in the HomeReady Income Eligibility Lookup tool during the weekend of June 23. The income limits will increase for about 94% of census tracts and about half will go up by at least 5%, which may help more of your borrowers qualify for HomeReady. The updated census tract lookup spreadsheet and income eligibility summary will be published on the weekend of June 23.

Freddie Mac announced the launch of “Borrower of the FutureSM,” a campaign that will help mortgage originators better understand and address the evolving needs of the next generation of consumers driving housing demand. Freddie Mac will deliver qualitative and quantitative insights showing how key trends affect various buyer segments, with the goal of applying these learnings industry-wide to improve the housing finance system.

Capital Markets

A quick clarification to a note this commentary had yesterday regarding Ginnie Mae restrictions for NewDay, Freedom, and SunWest in the VA loan churn crackdown. NewDay was not extended to October. NewDay had always been eligible to apply for non-custom pools in October. There were no new restrictions made by Ginnie Mae on NewDay last Friday and NewDay, as mentioned back in April, is eligible to apply in October to get back into non-custom pools, as was always the case.

U.S. rates move every day, sometimes because of what happens in this country, sometimes overseas. Rates slunk back down yesterday, due in part, to renewed weakness in Italian debt. Italy's Prime Minister Giuseppe Conte delivered his inaugural address, calling for the implementation of a universal basic income and a fairer tax system. Additionally, he called on the European Union to review sanctions against Russia and voiced his desire to improve Italy's fiscal standing by stimulating growth rather than cutting spending. Italian debt retreated throughout the day, accelerating its slide after the prime minister's comments. This comes as the European Central Bank will reportedly discuss winding down asset purchases at next week's policy meeting.

Let’s look at a few economic data points from yesterday – continued decent news out of the United States. The ISM Non-Manufacturing Index increased to 58.6 in May, the 100th consecutive month the index has been above 50.0. The Non-Manufacturing report matched an uptick in the ISM Manufacturing Index for May, substantiating the belief that Q2 GDP growth is poised to pick up noticeably from the Q1. Separately, the Job Openings and Labor Turnover Survey (JOLTS) for April showed that job openings increased to 6.698 million from an upwardly revised 6.633 million in March.

Today’s calendar kicked off with the MBA's mortgage applications report for the week ending June 1: up over 4%, with ARM loans topping 7% of overall applications. Next will be the international trade deficit for April, expected to be unchanged at $49 billion, along with preliminary Q1 productivity and unit labor costs which are forecast at 0.6% and 2.8%, respectively. Finally, we receive weekly crude inventories (prior -4.2 million) at 10:30 ET. The day begins with rates a smidge higher: the 10-year is yielding 2.95% and agency MBS prices are worse about .125.

Lender Products

Spruce, the modern title and escrow agency, announced a major upgrade to its digital closing experience, which allows borrowers to send closing costs and receive loan proceeds via ACH. Borrowers save time, money, and get added security that isn't there with wires and checks, and lenders get greater transparency into the funding process. To find out more or schedule a demo, visit the Spruce website.

For lenders, the golden question has long been, “How do you track and quantify the ROI of positive borrower satisfaction?” A new eBook, “Borrower Satisfaction & Profitability", melds focus areas and industry data to empower lenders to track and monitor the impact of their borrower satisfaction efforts. Exclusively for Rob Chrisman subscribers and a must-read for top performing mortgage lenders, download your free copy here.

“Need a warehouse lender that isn’t hung-up on your profitability? First Tennessee is a great warehouse lender who wants you to make money but realizes this is a cyclical business.  First Tennessee can help you make it through the tough times.  Call Scott Walker at 901-759-7755 if you’re getting pressure from your warehouse bank.  You may not know that First Tennessee is the only warehouse bank we know of that has never stopped funding loans, never stopped taking applications and never stopped adding and funding new customers, even through the dark days between 2007 – 2010. These guys get it.”

Mortech®, a Zillow® Group business providing mortgage technology solutions for mortgage bankers and secondary market teams, recently announced the launch of Mortech Protection, a customer retention solution that monitors and identifies addresses within a lender’s database that are at risk of attrition because the homes are currently listed for sale or are likely to be listed within the next 90 days. Lenders can use the Mortech Protection analytics to better target their marketing and outreach to current customers who intend to move and may need new mortgage financing. Some of the nation’s largest lenders are already using Mortech Protection to help them prioritize and target their marketing efforts. Mortech Protection is now available for both new and existing Mortech clients. For more information – contact Mortech Sales via email, (855-298-9327).

Mergers and Un-Mergers

Flagstar Bank is acquiring 52 Wells Fargo Bank branch locations, its almost 500 employees and its customers in Indiana (33 branches), the Upper Peninsula of Michigan (14 branches), Wisconsin (4 branches) and Ohio (1 branch). Wells Fargo bank branches located in the areas of Fort Wayne, Indiana, South Bend, Indiana, the Upper Peninsula of Michigan and Northern Wisconsin will become and rebranded as Flagstar Bank branch locations.

What does it mean? We should remember that large banks are limited in their size due to the deposit cap. Might Wells Fargo view this as a shift from slower, more dormant areas to expand in high growth economic areas? And in terms of the mortgage originations biz, many lenders will tell you that it has always been hard to make money in those markets due to the low loan sizes. (Of course, California lenders will tell you it is hard to make money there as well due to the high loan sizes. I guess it is hard to make money anywhere these days.) Throw in Wells’ approach to FHA lending, and to some extent rural lending as well, and the formulas just don’t work.

Angel Oak Commercial Lending, LLC has acquired a controlling interest in Cherrywood Mortgage, LLC, a national small-balance commercial mortgage lender based in Los Angeles.

CIT Group, apparently to “streamline” its mortgage unit, is selling Financial Freedom.